Weiss Ratings answers Critics on Bitcoin C+ Rating
Weiss Ratings released a public response to the criticism received since publishing their list of cryptocurrency ratings last month. Many investors, developers, and enthusiast highly criticized the ratings as none of the assets received a grade higher than a B. Specifically, a lot of noise was created as they graded Bitcoin a C+. Most of the criticism was centered on the brand and history around Bitcoin.
I previously released my own criticism in a prior post:
https://steemit.com/cryptocurrency/@newageinv/thoughts-on-weiss-ratings-for-cryptocurrencies
The post even got a comment from one of the leading analyst from Weiss. One item that was of consensus was the lack of transparency on their methodology in setting these ratings. In this latest publication, they made a point to explain parts of their methodology regarding the indexes and sub-indexes created to complete their analysis.
As I read through the article, I found myself taking notes on additional pitfalls but was pleasantly surprised to have them answered later in the article. For example, they mentioned the fact that Bitcoin dominance has been debatable and I thought that it is no longer debatable as it has gone down to recent lows established. So, I thought this should already be considered in the rating. Later in the article, this point is clearly considered as part of one of the sub-indexes.
Now, I am a numbers guy so consider that the best transparency is reconciling the charts to get to an index. However, I must give them space as I imagine these models are proprietary and we should respect that. I wish we could see increased transparency in these elements but time will tell.
I think this article has done a good job in presenting their methodology and provide guidelines are the items they are tracking. I definitely think that reports like these will add value to potential investors looking to research these assets. However, I always say you should never rely on third parties for investment decision making so do your own homework. I think the reports adds to the perspective you can create and contribute to your own.
Two outstanding questions I remained with are the following:
- Since the original release, bitcoin has suffered more declines in value and increased volatility. Why hasn’t this impacted the grade?
- I am still concerned on how they can prove they have no interest in these markets other than the subscriptions they get. How do we ensure there is no conflict of interest or how they remain independent?
However, as I stated above, I think the value provided in the report outweighs these questions as we should never rely on one report alone to create our own investment decisions. I think this is a good start and will continue to monitor Weiss reports for additional insights into specific assets in the market. No model is perfect (as they mention) but additional information is always a good thing. Let’s see what tomorrow’s anticipated report will show.